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Friday, November 15, 2013

At a time ,one of my old recommendations -Vesuvius India (Recommendation Link HERE) - recorded
its 52 week high price ,recommending another stock from the same sector. IFGL
refractories is the flagship company of SK Bajoria group.Company manufacturing Continuous
Casting Refractories and Special grade Refractories which find applications in
steel industry.Refractory
,in general ,means a class of materials
which are produced from nonmetallic minerals and possess capability to
withstand heat and pressure .Now IFGL has grown as an Indian multinational
with manufacturing facilities located in
Brazil, China, Czech Republic, Germany, India, UK and USA. Krosaki HarimaCorporation Japan ,a subsidiary of world’s second largest steel maker NipponSteel Corporation holding about 15 % stake in IFGL.Growing through acquisitions
is the strategy of IFGL and it reached the current stage through many
acquisitions in the past.In 2005 ,IFGL acquired Monocon group of UK with
factories in Brazil,China,USA and UK.In 2006, Goricon Group came to the fold of
IFGL .In 2008 ,IFGL acquired Hofmann Ceramic GMBH of Germany with manufacturing
facilities in Germany ,USA and Czech Republic.In 2010 ,Ohio ( USA) based EL
Ceramics LLC added with it .With all these acquisitions company grown as one of
the worlds largest manufacturer of refractories.These acquisitions broadened
company’s product portfolio which now consist of Isostatic Refractories,Tube
Changer Systems,Cast Products and Monolithics,Slide Gate refractories,Slide
gate systems and Foundry Ceramics.In addition to these products for steel
industry ,IFGL manufacturing Bio Ceramics for dental,orthopedic and ophthalmic
applications.

Fate of refractory companies closely related with the growth of steel
industry.Now steel industry world around showing some earlier signs of revival.As
a global player ,IFGL is expected to get
immense benefit from this revival.Its technical collaboration and equity
participation with one of the world leaders also helping the company to adopt
latest technology in manufacturing process. A major portion of company’s income
is from exports and the currency valuation of currency is also positive for it.

IFGL having a
good balance sheet too.Even after these series of acquisitions ,company ‘s debt
equity ratio is just 0.55 .For the latest September quarter,on a consolidated
basis company reported a Sales of Rs.201 Cr v/s Rs.181 Cr .Net profit improved
sharply from Rs.4 Cr to Rs.19 Cr. Half year EPS is Rs.9.70 which is more than
the full year figure of last year.Company having an uninterrupted dividend paying
record for the past four years.Promoters holding more than 70 % stake( NIL pledged) in the
company and another 7 % is held by large investors.At a time the steel industry
is showing revival ,I expect IFGL will report its best ever performance in this full
year.Even after improvement in its stock price in recent times ,@ CMP Rs.49
,IFGL is currently trading @ one year
forward P/E of just 3 .Considering industry’s improving prospects,stabilization of production from its newly built plant at Kandla SEZ and out
performance of company in its financials, I don’t expect any scope for deep
correction,hence recommending a BUY @ CMP Rs.49 .Stock listed both in NSE and
BSE.

Not JSW alone all power cos share price came down drastically in past few years.As of now ,there is no formula to fix the tariff based on raw material cost ie,coal,naphtha ..etc.Hence when there is a rise in the prices of these items on a continuous basis ,power cos are facing serious issues .Till there is a formula as in the case of petrol price is implemented ,power cos may report only poor numbers and we can't expect any significant re rating in their stock price.

Hi VP, I wanted to bring your attention to 2 of our old posts. Vimal OIl & Sequent Scientific. The loan amt is increasing for Vimal Oil & the profits are decreasing for Sequent. I have some investments in these. Would like to have you feedback on the results of both of these stocks for the quarter and your opinion on further accumulating these.

Vimal oil promoters are bringing more funds to the company by subscribing 36,00,000 Equity Shares on Preferential Basis.

In the case of Sequent ,as you are aware this company is owned by the same promoters of Strides Arcolab.Due to delay in govt decisions ,Stride's plan to sell its Agila unit delayed for the past many months.Now it is expected to complete in the fourth quarter of this FY.I believe ,once this sale process completed, promoters will pay much attention to the company.In recent times Sequent decided to start a joint venture with shasun and divest its veterinary division to a subsidiary.As far as my understanding ,for the past one year or so health of Its Chairman and Managing Director Mr K. R. Ravishankar, was in a critical stage and he was not in a position to handle the day to day operations of the company .Only recently company changed him from this post.I believe ,all of these decisions which happened in last two months are signs of the starting of some speedy actions in the company.

Tree house is HOLD @ CMP.I will not recommend any stock as a blind buy for 10-15 years period even blue chips , especially at a time business dynamics is changing very fast .Periodic review is necessary for any stock.